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"From a certain knight who swore on his honor that the pancakes he was eating were good, and that the mustard on top of them—he swore on his honor—was bad. Now, I’ll swear to the opposite—that the pancakes were rotten, and the mustard was fine—but even so, the knight wasn’t lying."

Touchstone is playing with logic. One can swear to something based on opinion. Touchtone says the truth is actually a point of view rather than an absolute.